Ethereum 2.0 is just around the corner, with “The Merge” set to kick off in around four weeks. The support for the fundamental upgrade can also be seen in the steadily increasing number of clocked ETH.
With “The Merge” at Ethereum (ETH), the crypto scene expects a major event around September 15. Ethereum, the undisputed second most important global cryptocurrency, will then change its protocol and thus lay the foundation for future viability. The path to “The Merge” began in December 2020, when a testnet for Ethereum 2.0 was launched with the Beacon Chain. In order for this to launch under realistic conditions, the community was called upon in advance to deposit ETH in the Beacon Chain. Delphi Digital now shows on Twitter how the number of ETH in the beacon chain has been growing ever since.
In the last twelve months alone, Ethereum holdings in the Beacon Chain doubled to now around 13.3 million, which is around 11 percent of the total holdings of all ETH. From an investor’s perspective, the Beacon Chain has been and continues to be attractive for their ETH because staking there rewards them with up to 10 percent annual interest. Staking in the Beacon Chain is the anticipation of the protocol change from Proof-of-Work to Proof-of-Stake and also arrives in the mainnet of Ethereum with “The Merge”. However, there is a catch for the staked ETH in the Beacon Chain: they are permanently deposited there and cannot be withdrawn again until further notice. The Ethereum Foundation now also clarifies that even with “The Merge” access to the stowed ETH in the Beacon Chain will not yet be permitted again, but that this will only happen after a later update “Shanghai”.
In parallel, the Ethereum Foundation explains further details about widespread misinformation about “The Merge”. For example, it is often heard that Ethereum transaction fees would drop drastically due to “The Merge”. This is just as false as the assumption that “The Merge” would significantly increase the speed and capacity of the ETH Blockchain. While Ethereum 2.0 is heading for all of these targeted improvements, they will only be incremental with further updates. ETH inventor Vitalik Buterin had already warned strongly against false expectations about “The Merge” this January. From his point of view, “The Merge” means about 60 percent of the way to an Ethereum 2.0 and according to Buterin, it should still take several years until it is complete.
Conclusion: “The Merge” will be a milestone for Ethereum – but expectations partly exaggerated
Ethereum has posted above-average price performance this summer compared to the overall crypto market, and this momentum is rightly attributed to “The Merge”. Apparently, however, not all investors realize that the launch of Ethereum 2.0, while historic, will have little noticeable impact on the day-to-day operations of the ETH ecosystem for the time being. Thus, when investing in Ethereum, it is currently important to weigh up to what extent “The Merge” is already priced in – and whether one wants to get involved in an investment that may have to be understood in the medium term with the time horizon of further important upgrades for a modern Ethereum 2.0.
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